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Dec 08, 2015

Guest Blog : Football but not as we know it!

This week it was announced that City Football Group (CFG) is partnering with China’s leading media, entertainment, sports and internet dedicated investment and operating company, China Media Holdings (CMC). CMC and Chinese investment firm CITIC Capital are buying a 13% stake of CFG. The agreement will see the consortium of CMC Holdings and CITIC Capital invest US$400 million towards CFG’s growth in China, international business expansion and further develop its infrastructure assets. The deal values the group at US$3 billion.

The deal is bigger than buying any marquee player or attracting the best manager out there, and CFG and Sheikh Mansour show how business should be conducted in the world’s biggest emerging market. City Group did not try to sign a Chinese or Japanese player thinking that Asian market is sorted, or by dragging the team to long-haul trips and playing the odd friendly game every 2-3 years. Not even by making xxx the official cat food partner in China! City rather planned a substantial long-term investment based and secured at government level, which includes even the possibility of building holiday-resort cities in the south of China. CMC have bought a stake of CFG and not of Manchester City FC or New York City FC, meaning that they do not have any saying into the running of the football clubs.

What the Chinese party is mainly looking to achieve through the deal is to have a better exposure in world football, eventually landing the big prize: hosting a World Cup. Xi Jinping, China’s president, and party to this deal, has made this clear by presenting a 50-point reform plan few months ago, aimed at making China a football leader. A creation of a CFG team in few years’ time starring in the Chinese Super League would also assist on the above.

What impact the agreement has on City’s rivals? Clubs like Manchester United or Real Madrid which are so popular in Asia could make similar investments in China, but without this kind of backing, to include Chinese officials. Also, if for example Manchester United chose to offer a 13% stake to investors, that would have to be through direct involvement in football. Without an established network of clubs and an arranged development plan feeding straight to China, an investor would be offered to get involved in the day-to-day running of the club- something that Chinese are not interested in.

In the long-term and in the case of China hosting the World Cup, CFG will be there as partners: City academies, City infrastructure, City partner companies! Now this is exemplary business and testimony of the great work the Abu Dhabi United Group is doing and also of the way the group views legacy projects and geopolitics! It is still football but not as we know it! The rest seem that have some catching up to do…